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India is one of the world’s fastest emerging economies, with an increasing youth population, that will represent the country’s growth and development in the global stature. India’s Gross Domestic Product (GDP) is likely to be reduced at 6.4% in fiscal year 2024-25, as compared to a growth rate of 8.2% in the Provisional Estimate of GDP of 2023-24.
Illustration by The Geostrata
However, the steady growth rate that the Indian economy witnessed over the past years, has not translated into a decline in the rate of unemployment amongst the youth. Due to multifaceted factors, there could be a potential crisis in the employment sector in India, if these are not tackled with caution. This article delves into the employment sector in India, its challenges, government policies, possible resolutions to tackle the ongoing stagnancy in this sector.
THROUGH DATA
Employment is a significant link between growth and prosperity, and it determines the economic status of the country. As per the Periodic Labour Force Survey (PLFS) report, the Labour Force Participation Rate (LFPR) rose to 56.4 % in 2023-24 from the previous 49.8 % in 2017-18, the Worker Population Ratio (WPR) witnessed a rise to 53.7 % in 2023-24 from the earlier 46.8 % in 2017-18, and the Unemployment Rate (UR) dwindled to 4.9 % in 2023-24 as contrast to 6 % in 2017-18.
This data provides a transparent picture of India’s employment sector, as the Labour Force and Work Force are steadily augmenting, and the UR has diminished, however not as significantly as it was deemed.
CHALLENGES
India is performing well in the macroeconomic landscape globally as compared to its various peers. However, the growth in the Indian economy has not translated to growth in employment in India, failing to achieve its full potential. As per 2024, around 30% of graduates are unable to find adequate jobs that match their expediency. The current unemployment rate which is at 7.5% showcases the gravity of the issue.
Subsequent are the reasons why India is yet to achieve its total potential to tackle the issue of unemployment. Firstly, despite India's growing GDP, there is a distress in the job market. The possible reasoning is expected to be India’s demand for capital-intensive industries rather than labour-intensive. Therefore, there is insufficient job creation, which erodes the human capital built through investments in the education sector.
Additionally, the rise of technological advancement and replacement of Human Intelligence with Artificial Intelligence, further diminishes the possibility of employment for job seekers. Secondly, there is a huge lacuna between the requirements of the industry and the curriculum inculcated in educational institutions. This is known as skill mismatch.
According to India Skills Report 2024, only 50 % of Indian youth with formal education have the required skill set to be employable based on the industrial standards.
Thirdly, there is a massive informal sector, around 80 % in India. This may or may not include self-employment, but it is “neither taxed nor monitored by any form of government.”
It means that there is an absence of official recognition to this sector and the workers have no minimum wage guarantee or social security. This contributes to income inequality amongst the citizens, proliferating into various socio-economic issues. Casual labour which translates to “disguised unemployment,” comprises 21.8 % of the total workforce in India.
Fourthly, the global average of female labour force participation is 50%, whereas, in India, it is roughly around 37 %. When the females are underrepresented in the labour market, the country misses out on half of its potential which would lead to optimum economic growth.
GOVERNMENT ENDEAVOURS
To tackle this issue, the government has been in the forefront to effectively utilise its youthful labour force. There are several government schemes to enhance the skill development amongst the youth. These schemes include Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Jan Shikshan Sansthan (JSS), Skill India Digital Hub platform, and various international policies as well. Under the National Apprenticeship Promotion Scheme (NAPS), there were 32.38 lakh apprentices from FY 2017 to FY 2024.
Furthermore, there are schemes that have enriched the participation of females in the labour force. These include Jal Jeevan Mission (JJM), PM Ujjwala Yojana, Lakhpati Didi Scheme, Drone Didi Scheme, etc. There are several incentives which aid in increasing the female participation in the education and employment sector.
Alongside, there are adequate maternity benefits to improve working conditions of women at the workplace. Since the recent past, the government is actively increasing the entrepreneurial spirit of the nation through initiatives such as Startup India Initiative, Pradhan Mantri Mudra Yojana, Atal Innovation Mission (AIM), etc.
Additionally, through the initiative of Jan Dhan Yojana, Aadhaar, and Mobile Number (JAM) trinity, the government has taken a huge stride towards financial inclusion. This was an attempt to include the informal sector in the economic growth of the nation.
Most significantly, India is witnessing advancement in technology which leads to digital literacy and in overall inclusion of its citizens in the economy of the country. To sum up the government's endeavours, in the last decade from 2014-2024, 17.9 crore additional jobs were created, in contrast to 2.9 crore jobs in 2004-2014.
POLICY RECOMMENDATION
The challenge of unemployment in India needs to be resolved with a comprehensive approach. There are several bottlenecks that need redressal to facilitate employment growth. Firstly, along with basic education, higher education, too, should become the priority. This should be along with skill development as per the requirement in the domestic and international economic standards.
The culture of rote-learning should be done away with, and critical thinking, analytical learning, conceptual understanding must be prioritised in educational institutions. Secondly, as per the fourth industrial revolution i.e. the digital technology, this should be integrated within the learning program of students to understand the emerging digital industry. This opens avenues for innovation, improves efficiency and enhances productivity.
Thirdly, the government should take strides towards integrating the informal sector which will lead to compounding in economic growth. Fourthly, India should make optimum utilisation of its human resource, by promoting labour-intensive industries to increase employment opportunities.
Fifthly, the government should facilitate the growth of entrepreneurial spirit, support Micro and Small Medium Enterprise (MSMEs), ease methods to conduct businesses, enhance female participation, and also invest in infrastructure to upscale India’s growth story in the global arena. Lastly, and most significantly, there should be enrichment in women participation as they can double the workforce capabilities.
This can be done through promotion of education and skill-development. More women should be enrolled to inculcate skills related to technology, which can further aid in several fields from agriculture to textile, food processing, etc. Women should be encouraged to become entrepreneurs, by upscaling their skills, providing loan facilitation, and easing the procedure to conducting business.
CONCLUSION
Nevertheless, in a country with 141 crore population, there is a dire need to tap the potential and to accelerate its economic growth and development journey, and thereby, achieve its aims to become a developed nation by 2047 – Viksit Bharat. For this dream to be accomplished, the government, policy-makers, businesses, and other stakeholders must work in tandem and address the challenges that hinder this growth.
There is a necessity to address the alarming issue of unemployment in India; to decrease unemployment rate, create job opportunities, improve wages, and harness the demographic dividend effectively. The upcoming Union Budget should take significant measures that cater to the needs of youth in the employment sector. There are great avenues to advance for inclusive and sustained growth in the employment sector of India.
BY ARYA GHADIGAONKAR
TEAM GEOSTRATA
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